July 10, 2020
Episode 17 - In Japan, the market value of secondhand condominiums at what age is likely to start declining? - The latest transactions and demand of secondhand condominiums -

Most people prefer to live in a new construction house or condominium if given the choice, investors on the other hand would overwhelmingly rather aim at secondhand condominiums. Japan is known to experience frequent earthquakes and other natural disasters. As a global investor, you would expect that old properties should be harder to sell?

The following chart shows the average building age of properties sold recently to be about 20 to 24 years. As written in episode 16, the number of transactions of secondhand condominiums as well as the transaction value, declined in April due to the coronavirus pandemic whilst the age of properties in transactions actually increased.

Average property age

 

 

 

 

 

 

 

 

 

 

Source: Prepared by International Interface based on REINS data (From January to May, 2020).

 

In many European countries, it is common to see buildings that are 70 – 100 years old being traded in the real estate market whilst properties sold in Japan seem to be rather new in comparison. So, what is the oldest property sold recently in Tokyo?

According to last year’s transactions (including from other companies), buildings over 30 years old have actually been sold abundantly. We have further looked at transactions for buildings with 30 years old or older in three areas of Tokyo Center (Chioya-ku, Chuo-ku, Minato-ku) as below.

 

Built in                                       No. of transactions

1950s (more than 60 years old)                 1

1960s                                                      23

1970s                                                  231

1980s                                                     181

 

The average price of the above transactions was over 40M yen with the unit price per square meter of 810K yen. It was higher than the average transaction price of 520,300 yen per sq. meter (including buildings of all ages sold in Tokyo) in May, 2020.

Since World War II in 1945, many buildings in Tokyo have borne witness to various historical phrases of high economic growth and bubble collapse together with repeating earthquakes. As we can see, even building that is 60 years old in Tokyo is possibly sold at a good price if buyer’ requirements are fulfilled although they are still comparatively younger than those in other western countries.

As discussed in previous episodes, it is rather easy to choose when to acquire capital gain through a long-term ownership with properties in Tokyo center. Also, it is quite interesting to see how quick Tokyo real estate has recovered from previous market crashes with its unique strength. We are looking forward to arranging property viewings for you after the Coronavirus pandemic has settled down.

 

Source: REINS data of the latest transactions (Jan – May, 2020)

 

To know more about Japan market and invest here, please talk with our agents either in English, Chinese or Japanese.

Disclaimer:

Neither International Interface nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.